Ken Clarke hopes he can reduce the prison population by 3,000 by 2014.
Photograph: Martin Argles for the Guardian

Around 5,000 prison cells will be lost and 10,000 jobs across the Prison Service will be axed under a government plan to shut six jails in England and Wales.

The Ministry of Justice is reportedly preparing a list for establishments for closure as part of an overhaul of sentencing policy designed to reduce the number of offenders behind bars.

A consultation green paper outlining the reduction, a reversal of the Labour government's plan to increase prison accommodation from the current 88,000 places to 96,000, is due to be published next month.

The proposal comes after George Osborne's demand for a 23% cut in the ministry's budget by 2014/15 in the spending review. Justice secretary Ken Clarke hopes he can reduce the prison population by 3,000 by 2014, rather than the previous government's forecast that an extra 8,000 places would be needed. He reportedly intends to achieve this by reforming sentencing, transferring mentally ill offenders to NHS units, and repatriating more foreign national offenders.

Jails that may be vulnerable to closure include Shepton Mallet in Somerset, Shrewsbury, North Sea Camp in Lincolnshire and Dartmoor in Devon; larger inner-city prisons such as Wandsworth and Pentonville in London are thought to be still viewed as important.

Colin Moses, chairman of the Prison Officers' Association, called for a policy of smaller jails instead of closures.

"We do not believe at this time that there should be any prison closures until we have had a root and branch review of the prison estate," he said. "We believe smaller prisons deliver the things Ken Clarke is talking about, such as good offender behaviour programmes."

There are doubts over whether there are sufficient NHS facilities available to take offenders, and whether large numbers of foreign national prisoners can be returned; last year only 41 of almost 8,000 convicted were returned.

Meanwhile, the chief inspector of prisons, Nick Hardwick, told the Times that he believed that inmates were being treated very badly.

"You look at the conditions some people are in and what's happening to them and the lack of care they are getting and you think, 'This is just a disgrace'," he said. Not enough focus was put on trying to stop offenders returning to crime, with many inmates sitting around playing cards even in workshops, he said.

The justice ministry said last night: "We expect that by the end of the spending review period the number of prisoners will be around 3,000 lower than it is today, equivalent to 2008 levels.

"We are looking at the sentencing frameworks for adult and young offenders, as well as the full range of penalties available in the criminal justice system. Long-term decisions on prison capacity programmes will be taken in the light of these policy developments."